Obsidian Entertainment is shifting its development focus away from an unannounced sequel to Avowed and toward a new mainline entry in the Fallout franchise. This strategic pivot comes shortly after reports that the studio lost approximately 25% of its workforce due to broader Microsoft Xbox layoffs.
New Fallout project led by Josh Sawyer
The upcoming Fallout title will be helmed by Josh Sawyer, who served as game director for Fallout: New Vegas. That 2010 RPG was developed in partnership with Bethesda Game Studios and is widely regarded by fans as one of the strongest entries in the series due to its deep writing and reactive gameplay systems.
Sawyer previously worked on an original RPG structurally similar to Fallout, but that project has now been set aside. Instead, he will lead the team on this new licensed title. While details are scarce, Bloomberg reports indicate that Bethesda Game Studios—the current steward of the Fallout IP—will collaborate with Obsidian. It remains unclear whether this involves direct co-development or if Bethesda will provide oversight and support.
Avowed sequel canceled
To prioritize the Fallout project, Obsidian has officially canceled a planned sequel to Avowed, the action RPG released in 2025. Development on the sequel was reportedly progressing well, with plans to announce it publicly in 2027. However, Xbox leadership decided that continuing the project did not align with their new strategy to “move faster” with core intellectual properties like Fallout.
Despite the cancellation, some developers may continue working on the Avowed sequel codebase with the hope that it could be greenlit again in the future. Meanwhile, Obsidian will maintain development efforts on DLC expansions for The Outer Worlds 2 and content updates for the early-access survival game Grounded 2.
What this means for you
For Windows gamers expecting a direct continuation of the Avowed story, this news is disappointing. The cancellation reflects Xbox’s broader restructuring under CEO Asha Sharma, which emphasizes consolidating resources around flagship franchises rather than expanding mid-tier IPs.
However, fans of deep, narrative-driven RPGs have reason to be optimistic. With Josh Sawyer at the helm and Bethesda providing support, there is potential for a return to form for the Fallout series. Given the current cultural momentum behind the franchise—fueled by Amazon’s popular TV adaptation—a new mainline game could arrive sooner than if Bethesda were handling it alone alongside The Elder Scrolls 6.
Source: Windows Central / Bloomberg
Over to you: Are you disappointed by the Avowed sequel cancellation, or excited for Josh Sawyer’s return to Fallout?
